Breakingviews: Morgan Stanley seduces

Jeffrey Goldfarb and Antony Currie discuss how the bank run by James Gorman generated its best return on equity in years and the tantalizing prospect of it beating its cost of capital.

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Wrapping up the earnings for the big US banks Morgan Stanley today. They posted some sort of cluttered numbers but but they were good laughable is that -- And as the -- a bit like Tennessee and be abated has been struggling for several years to come to results from Britain the company cost account. Take a more -- they go to fables more problems that businesses. Then the likes to say taken opened access -- critical praise and I was looking Morgan Stanley's stock has over the last year outperform. All of the big boards pretty well as owners some hope yeah yeah so that takes it just about to book values just trading -- to -- -- A more clashes I think is investors are now saying okay we now think that this bank. Can. Conference calls to capitol. It's not -- what if it's not legal that today Peta is -- don't let an opposite the town which does conference. But that relies on the 600 million dollar taxpayer these results cover a little bit reminiscent of sort of 2009 had worked -- and moving part yeah -- at the last time they they had anything like this kind of match to have forty cents on equity in the circle of 2011 and that was purely from. A grandparent -- -- isn't -- yet decision of kind of stripped out of talk a little bit what -- street if you strip out. That tax -- And you strip out a small amount of gains -- isn't -- it's -- just done it sent Mattel and Erica. But is it doesn't sound great in his thing every single businesses post every single business is growing. So equities trading is filed drawing that to which depending which according to cap investment banking results looking pretty cute. Even -- even think trading which wasn't pretty it was there are 13% if he stripped back company number is that she is relatively flat to last year as well whereas. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Is wasting his bank. So it's go as bank thinks that Blanche he thinks is buying the Stefani -- -- right on the forum. They sign it put more of -- securities in the and we just makes a bit more efficient than having to borrow money. It's about a 127 billion deposits is also a stunt to lend money to place his wealth management console so little bit out of the investment bank. -- cynical about 30% loan to deposit -- has got huge amount they can -- run average US bank. Ben's got a 75%. Of his deposits -- but still pretty -- -- -- -- processor more appetite to do that to -- with that take business away from rivals. In the seventies with the -- small amount here. Yeah and we eagle may -- -- of 5060 billion before it gets the same level as others but his thing it doesn't have to do it to be quickly. That's again the impact it doesn't have to take a lot of risks like say some of the big Rex might have to that we think until we do that -- what was thanks typing classes never lent money to youthful. So it can best be quick he will be sees madness spirit and some money out and the impact that makes this goes his wealth management line when you have the 60% to 5860%. Compensation makes it. -- -- CC you gentlemen reckons he can get back corporation down 55% next year. Thanks to more money lending purely from -- and nothing else and I swam in the was quickly -- enough -- hundred million dollars of an extra revenue. What to profit to tourists and 11% of zoning XRS and up to date we have heard a lot of these kind of promises -- -- -- in the hospital as seeming nothing else is -- which -- they're wrong. Should get in somewhere close that the next -- all right missile that mobile live out the surprising term but we will keep an eye on it and will we've -- more written -- tomorrow.

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